"We have no intention of imposing restrictions on Israeli banks that do business in the settlements. This entire issue is complete nonsense. This issue has never been considered," the official said.

After the EU agreed to push ahead with labeling Israeli good manufactured in Judea and Samaria, the European Council on Foreign Relations called for additional action in its report "EU Differentiation and Israeli Settlements."

The report, published Wednesday, claims the EU is violating its own law and must take firmer steps to distinguish its dealings with Israel from the "settlements" in Judea and Samaria.

ECFR recommended imposing sanctions on Israeli banks, academic qualifications from Judea and Samaria-based universities, and the tax-exempt status of European charities who help support Jewish communities in the area.

Unsurprisingly, the release of the report from a think tank whose proposals often inform EU policymaking sparked panic, with stocks of Israeli financial institutions beginning to tank.

EU officials rushed to assuage concerns, emphasizing that the report contained only recommendations that have little chance of being adopted by the European Parliament.

"This is an independent research institute that has no connections to the European Union and has no more influence than any other research institute," the official said.

"Anyone can publish reports. It has no basis in reality. There are no plans for further legislation on this issue except for the plans to label settlement products which are moving forward, but have yet to be finalized."